Gold tops $1,300 as economic data disappoint

Weaker dollar adds support and prices settle at highest in over 3 months

WilliamL. Watts

SAN FRANCISCO (MarketWatch) — Gold futures topped $1,300 an ounce on Thursday, marking the highest close in more than three months as a bigger-than-expected fall in January U.S. retail sales and a rise in weekly jobless claims helped fuel weakness in the dollar and lured investors to the perceived safety of the precious metal.

Gold for April delivery
US:GCJ4
tacked on $5.10, or 0.4%, to settle at $1,300.10 an ounce on the Comex division of the New York Mercantile Exchange after a high of $1,301.60. Prices haven’t closed at levels this high, or above $1,300 since Nov. 7, according to FactSet data tracking most-active contracts. They’ve now climbed for seven sessions in a row for a total gain of nearly 4%.

March silver
US:SIH4
added 5 cents, or 0.3%, to $20.395 an ounce following eight-straight session of gains.

AFP/Getty Images

Gold climbed on “worse-than-expected retail sales figures along with a higher initial jobless claims number — both contributing to lower U.S. dollar
DXY, -0.30%
and therefore a higher gold price,” said Jeffrey Wright, managing director at H.C. Wainwright.

The Commerce Department on Thursday said retail sales saw a seasonally-adjusted drop of 0.4% in January. Economists polled by MarketWatch had forecast retail sales to fall 0.1% overall.

Weekly jobless claims rose by 8,000 to a seasonally adjusted 339,000, compared with the total claims of 330,000 expected by analysts surveyed by MarketWatch.

Economists said the figures probably won’t alter the U.S. Federal Reserve’s plan to continue scaling back its bond purchases. Gold tumbled sharply in 2013 as the Fed prepared to scale back the purchases. The Fed’s aggressive monetary easing had been seen as a major driver of gold’s post-financial crisis rally on ideas the measures would undercut the dollar.

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“Gold bulls are taking advantage of Yellen’s comment that the taper is not on a fixed path,” said Jason Rotman, president of Lido Isle Advisors. From here, prices may head to at least $1,307, which is Lido Isle Advisor’s our next technical target, he said.

But also looking ahead, Yves Lamoureux, president of Lamoureux & Co., a market advisory firm based on behavioral economics, said he expects gold prices to fall toward his $1,000 target, as the recent bounce in prices has been “shallower and shorter” than he expected.

“Most of the rebound is short covering and we are shocked at how weak gold has been,” he said.

In other metals trading Thursday, April platinum
US:PLJ4
rose $9.30, or 0.7%, to $1,416.60 an ounce, while March palladium
US:PAH4
added $2.05, or 0.3%, to $731.10 an ounce.

March high-grade copper futures
US:HGH4
fell less than a cent to $3.25 a pound.

Miners rise

Metals-mining companies, meanwhile, were busy reporting quarterly earnings. It’s “not going well so far” but there also hasn’t been any big surprises either, said Wright.

“The market is not expecting very good financial performance from gold [and] silver miners in the quarter given a drop in gold and silver prices,” Wright said. “The key is to look at impact in any companies declared reserve update. Both Goldcorp
GG, +5.06%
and Barrick
ABX, +0.14%
reported lower reserve estimates; primarily due to the requirement to use a lower gold price assumption in the calculation.”

Shares of Barrick Gold Corp. were up 5.3%. The company reported a net loss of $2.83 billion, including after-tax impairment charges. It saw adjusted earnings of 37 cents a share, below the 41 cents a share forecast by analysts polled by Thomson Reuters. Revenue fell but beat Wall Street’s expectations.

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